Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fieldgard Inc. invested $800,000 in a project nine years ago. This project has generated $320,000 cash revenues per year and incurred $250,000 cash operating costs

Fieldgard Inc. invested $800,000 in a project nine years ago. This project has generated $320,000 cash revenues per year and incurred $250,000 cash operating costs each year. The project qualified as 7-year property under MACRS (modified accelerated cost recovery system). Salvage value of this project (at the end of the tenth, and final, year of the project's life) is expected to be $200,000. The project required $80,000 net additional working capital at its inception and another $60,000 at the end of year 5. The combined increased working capital commitment is expected to be fully recoverable when the project terminates. The company is subject to a combined 40% income tax rate, t.

Required: What is the expected total after-tax cash flow expected from this project next year (i.e., during the 10th and final year of the project's life)? Round answer to nearest whole number.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Digital Transformation In Accounting

Authors: Richard Busulwa, Nina Evans

1st Edition

0367362090, 9780367362096

More Books

Students also viewed these Accounting questions

Question

What are employee assistance programs and wellness programs?

Answered: 1 week ago